Fidelity Sustainability U.S. Equity ETF (FSST)

ETF Fidelity Sustainability U.S. Equity ETF (FSUTX) Overview:

Profile:

FSUTX is an actively managed ETF focusing on U.S. large- and mid-cap companies demonstrating sustainable business practices and environmental, social, and governance (ESG) considerations. It employs a fundamental bottom-up stock selection process and seeks to outperform the Russell 1000 Growth Index over a full market cycle.

Objective:

The primary goal of FSUTX is to achieve long-term capital appreciation by investing in sustainable U.S. companies.

Issuer:

Fidelity Management & Research Company, a well-respected and established asset management firm with over $3.3 trillion in assets under management, issues FSUTX.

Market Share & Total Net Assets:

FSUTX holds a market share of 0.03% in the sustainable U.S. equity ETF category and has total net assets of $310 million as of October 26, 2023.

Moat:

FSUTX boasts a competitive advantage due to its:

• Experienced Management Team: Led by seasoned portfolio manager George P. Zydiak, with over 20 years of experience in sustainable investing.

• Active Management Approach: Allows for greater flexibility in identifying and selecting high-quality, sustainable companies.

• Strong ESG Integration: Robust ESG screening process ensures investments align with sustainability criteria.

Financial Performance:

FSUTX has delivered a 3-year annualized return of 12.99%, outperforming the Russell 1000 Growth Index by 0.99%.

Growth Trajectory:

The increasing focus on sustainability in investing suggests a positive growth trajectory for FSUTX.

Liquidity:

FSUTX has an average daily trading volume of 25,000 shares, indicating moderate liquidity. The bid-ask spread is 0.03%, implying a low trading cost.

Market Dynamics:

Factors affecting FSUTX include:

• Economic Growth: A strong economy can lead to higher corporate profits and improved ESG performance.
• Technological Innovation: Advancements in sustainability technologies can benefit environmentally conscious companies.
• Government Regulations: Increased ESG regulations may further drive demand for sustainable investments.

Competitors:

• iShares ESG Aware MSCI USA ETF (ESGU) - Market Share: 20.67%
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) - Market Share: 9.44%
• SPDR S&P 500 ESG ETF (EFIV) - Market Share: 8.41%

Expense Ratio:

FSUTX has an expense ratio of 0.39%.

Investment Approach & Strategy:

FSUTX employs a fundamental bottom-up stock selection process, focusing on companies with:

• Strong financial performance.
• Commitment to sustainability.
• Attractive valuations.

The ETF’s composition primarily includes large- and mid-cap U.S. stocks.

Key Points:

• Actively managed sustainable U.S. equity ETF.
• Outperforming benchmark and delivering strong returns.
• Experienced management team and robust ESG integration.
• Moderate liquidity and low trading cost.

Risks:

• Market Volatility: Stock prices can fluctuate significantly, impacting the ETF's value.
• Sustainability Risk: Companies' sustainability practices may not align with expectations, impacting returns.
• Active Management Risk: The ETF's performance depends on the manager's skill and success in selecting stocks.

Who Should Consider Investing:

FSUTX is suitable for investors seeking:

• Long-term capital appreciation.
• Exposure to sustainable U.S. companies.
• Active management with a strong ESG focus.

Fundamental Rating Based on AI:

8.5 out of 10. FSUTX demonstrates strong financial performance, experienced management, and a well-defined sustainable investing strategy. However, the moderate liquidity and active management risk require consideration.

Resources:

• Fidelity website: https://fundresearch.fidelity.com/mutual-funds/summary/316414212
• Morningstar: https://www.morningstar.com/etfs/xfsa/fsutx/quote
• ETF.com: https://www.etf.com/etf/FSUTX

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.